It's time to Energise Ireland: our campaign for a green economic and energy revolution

Hey everyone, we've just launched our Energise Ireland campaign for a green energy and economic revolution in Ireland. We need all the support we can get for what we believe is a vital campaign — you can read the manifesto and sign the petition at the campaign website, and follow us on Twitter too. 

Energise Ireland has five key aims, all of which we believe are crucial to developing a sustainable, thriving economy in Ireland.

1. Become oil free & no longer a net energy importer by 2025. If we don't do this, the rising cost of importing oil will stifle our economic recovery.

2. Develop green bonds to offer Irish citizens a safe, patriotic investment in sustainable energy projects.

3. Upgrade the entire building stock to net zero carbon by 2020, by retrofitting buildings and switching to renewable heat and electricity.

4. End fuel poverty by 2015 to protect the health of the most vulnerable in society while reducing cost to the taxpayer.

5. Implement world leading green public procurement requirements, giving Irish suppliers an innovation edge for export.

For anyone uncertain, here's a reminder of why it's crucial for us to wean off oil as soon as possible. 

Let us know what you think about the campaign — email us at info [at] energiseireland.ie, or comment below. And if you like it, please sign the petition

Oil price to stifle recovery — world's first zero carbon city — Victorian passive house  

Here's a few interesting links for your perusal. Apologies for the lack of updates recently, producing the new issue of the mag was a bit of a marathon, but we hope it was worth it. Normal service on the website should resume now.

International Energy Agency chief economist Fatih Birol has warned that the price of oil could stifle global economic recovery over the next few years — a point we at Construct Ireland have made repeatedly in an Irish context, just as we're about to launch our Energise Ireland campaign to make Ireland oil free by 2025. In this radio programme, Birol warns that, "higher oil prices means putting pressure on the trade balance and through that economic recovery efforts can be well strangled." ABC Radio

A new way to duct HRVs: should they be pulling stale air from bedrooms rather than 'wet' rooms? Green Building Advisor

A Victorian home in the UK meets the passive house standard Green Building Advisor

New study finds solar panels are contagious Good.is

A profile of Masdar, the world's first "zero carbon city" Guardian (with pictures here)

Average Irish house prices could still be overvalued by up to 30% Irish Times

What will be the fate of architectural heritage in the Nama portfolio? Ireland after Nama

Natural gas: not as clean as we thought? Infrastructurist

Easca and Green Works present green building forum

Easca and Green Works will host a green building forum on 6 May in Dublin. The theme of the event will be the question of how to create a fully sustainable built environment by 2030 in Ireland.

Leading national and international speakers will be presenting, including Pooran Desai, co-founder of green entrepreneurial charity Bioregional and Noel Morrin of multinational construction firm Skanska. Kelly Grainger of Interface will talk about "closed loop production", and architect Tom Wooley will discuss opportunities for Ireland to develop natural construction materials. Mike Haslam from leading green architects Solearth and sustainable design consultant Jay Stuart of DWEcoCo will also speak.

The forum will also include seminars on various building rating methods, such as Leed, Breeam, Spear and the Living Building Challenge. A discussion on which of these tools Ireland should adopt will follow. There will also be a workshop on how Ireland can "create sustainable communities from the detritus of the boom". This will examine the role of unemployed architects and urban designers in rejuvenating the city of Barcelona, and it will also look at opportunities for Nama to help create the sustainable communities.

This forum is free for jobseekers who register with Green Works, otherwise the price is €50. There is a concession rate of €30 for members of Easca, the RIAI, Engineers Ireland, the Society of Chartered Surveyors, the Irish Property and Facility Management Association, the Irish Planning Institute, and attendees of Easca's Green Building Users Group.

Floating Dutch neighbourhood — are smart grids a good idea? — why dismantle the planning act?

Here's a few interesting links for your reading pleasure. Have a good weekend everyone, and do leave your comments and feedback below. 

Architecture that adapts to a changing climate: floating neighbourhood in the Netherlands Treehugger


Floating neighbourhood at Ijburg, Amsterdam. Photo by Michael Edwards.

Do smart grids increase energy use, endanger the environment and harm public health? Energy Bulletin

How big is the 2011 oil price shock, and what is the relationship between the oil price rises and economic downturn? Financial Times

Conflicting stories over whether the heating system was working in the home of young mother who died of hypothermia in Ballymun, Dublin Irish Times

Here's some nifty Tokyo apartments I'm linking to for no apparent reason: Flickr

Interesting blog post speculating on the "deaths per watt produced" of nuclear, oil and coal power: Seth Godin

When is removing a major road a good idea? Infrastructurist

New glass windows with integrated solar PV: Jetson Green

New York's first passive house: Jetson Green

British government accused of giving in to construction lobby and abandoning plan for zero carbon homes Guardian

Excellent blog post from Rob Kitchin from NUI Maynooth on Fine Gael-Labour's plans to review the planning act and potentially remove ministerial oversight of council planning decisions that were introduced by John Gormley. Kitchin writes: "A cynic would suggest that the new Ministerial powers were unpopular at the local level because they were used to stop councillors undertaking excessive zoning and giving inappropriate permissions (the result of which led to way too much zoned land and an excess of housing, offices, hotels and retail space).  Local councillors and local TDs want such powers removed so they can get back to business as usual..." Ireland After Nama

Sustainable development vs historic preservation — a false dichotomy Treehugger

A look at public infrastructure bonds in the US — would something similar work here to help fund retrofit on a massive scale? Infrastructurist

Houses made from meat — homes of the future — off grid in the desert

Happy Monday everyone. Here's a few links that might be of interest:

Growing homes from plants, and, um, meat:

Putting a shower in the living room: has space saving architecture gone too far? Treehugger

Good hospital design has an impact on patient recovery, says the British Medical Association Treehugger

NUI Maynooth geographer Rob Kitchin reviews the aspects of the programme of government that relate to housing and planning Ireland after Nama

What will a typical home be like in the 2050s? Sustainable Cities Collective

A Glow in the Desert: profile of an off-grid desert house New York Times

Two stories about urban spaces in Ireland that you may have missed: Dublin City Council kicks green space to touch (Irish Times), and can Dublin follow New York's pedestrianisation lead? (Dublin Observer)

Commercial buildings must disclose their energy ratings (Guardian)

The new programme for government: good or bad for energy, buildings and the environment?

Most of the national media's focus on the new programme for government has naturally centred around Fine Gael and Labour's economic plans. But what does the document say about the government's policies on buildings, energy and the environment? I went through it this morning to pick out the highlights. There appear to be good intentions, but much of the language remains vague. That's par for the course with a document that has to be drawn up as quickly as this.  We should start to hear more about specific policies in the coming months as new ministers are appointed and settle into their roles.

The new government says it will:

Energy efficiency in buildings

  • double funding of home energy efficiency and renewable energy programmes (presumably the Home Energy Saving and Greener Homes schemes), but end them by 2014.
  • introduce a 'pay as you save' scheme in 2014 to replace grants, allowing homeowners to pay for energy upgrades over time on their utility bills (Construct Ireland lobbied extensively for a scheme like this in 2009 and 2010)
  • tender for a 'pay as you save' contract to insulate all public buildings
  • move towards zero carbon homes "in the longer term" - what is meant by "zero carbon" and "longer term" is unclear. Will the new government keep the previous one's commitment to "zero carbon" new homes by 2013?

Energy

  • establish Ireland as a "renewable manufacturing hub" and a "centre of excellence in the management of carbon" - exactly what these terms mean (particularly the latter) or how they will be achieved is not specified
  • Merge Bora Na Mona with Coilte to create a new company called BioEnergy Ireland that will become a "global leader" in "next generation bioenergy technologies", and will plant 14,700 hectares of forestry annually
  • publish a climate change bill to provide a "clear pathway for emissions reductions" in line with the EU's 2020 targets - this suggests the last government's climate change bill might be scrapped, as it was incorrectly perceived by the opposition to be tougher than the EU 2020 targets
  • "legislate to support the geothermal energy sector"
  • cluster new wind farms in areas with the best "wind regime" to reduce cost of connection to the grid - the idea here is for the government to plan the growth of wind farms rather than developers. But will this slow down the growth of the sector?
  • aim to "maximise return to the Irish people" from offshore oil and gas reserves
  • ensure that only the most "cost effective" projects are supported by the renewable energy feed in tariff, and set the tariff at a level "not significantly above" the all Ireland market price for electricity

Infrastructure

  • accelerate capital works that are "shovel ready" and "labour intensive" - it's not clear what projects the government sees as meeting these criteria
  • invest heavily, through semi state companies, in "next generation" infrastructure in energy, broadband, forestry and water over the next four years
  • establish Irish Water, a new state company that will take over water investment and maintenance from local authorities
  • create a new "smart grid" company with full ownership of Ireland's electricity and gas networks, following a handover of the ESB's "transmission assets" to Eirgird - is the removal of the network from ESB's remit a hint that the government is planning to privatise the company?

Other

  • target up to €2 billion in sales from "non strategic state assets" - it's believed FG and Labour see Bord Gais and ESB as falling under this category
  • "bring forward a coherent plan to resolve the problems associated with ghost estates" - no specifics are given
  • commit to "urban regeneration to revitalise communities in areas such as Limerick" - again, the language remains vague
  • require that the selling price of all dwellings is recorded on a public national house price database
  • introduce a "mandatory compliance bond" to ensure construction waste is properly managed and recycled - I take this to mean that developers will have to pay a bond that will only be returned if they can demonstrate waste from a project was properly recycled or disposed of
  • ratify the Aarhus Convention that gives the public access to information and participation in decision-making on environmental issues - green campaigners have been pushing for this one for a long time, but it was also in the 2007 programme for government and has yet to be fully implemented
  • allow domestic turf cutting on 75 National Heritage Area sites subject to a "code of environmental practices"
  • "re-balance transport policy in favour of public transport" - there are no specifics on the government's plans for public transport, however, except to establish a cabinet sub-committee on the issue and to support public bike schemes
  • exempt farm diesel from further increases in the carbon tax
That's what stood out for me in term of energy and the environment. What's your reaction to the document?

The Gypsy Junker

Here's structure — I can't really called it a house — that Derek Diedricksen built to prove "that you can built a semi viable shelter with nothing but crap". 

[video:http://www.youtube.com/watch?v=LmR3kx660gw&feature=player_embedded 500x400]

 


Parties commit to climate bill — ten materials to save the world — biodiversity thrives in New York

Here's our latest collection of links — let us know what you think.

All Irish political parties commit to passing climate change legislation Friends of the Earth (whether it will be any good or not is another question

Right idea, wrong result: an insulation job gone wrong Green Building Advisor

Are venture capitalists investing less in energy efficiency? Wall Street Journal

Ten materials that could save the world (apparently) fastcodesign.com

Is New York City an ecological hotspot? New York Magazine

Anger at plans to build new houses on ghost estate Irish Examiner

This new apartment building in Chile looks stunning — but is it green? Treehugger

Just how green are green roofs (and shipping container architecture, and garden sheds)? Treehugger

RIAI publishes election wish list

The Royal Institute of the Architects of Ireland (RIAI) has published its election manifesto — essentially its wish list for the incoming government. I've had a browse through, and here are some of the ideas that stood out for me:
  • a reduction of Vat to 5% for of all energy upgrade repairs, maintenance and improvement works to private buildings
  • speed up the roll out of approved capital projects, and fund these through "innovative" methods such as equity partnerships and build-to-lease schemes
  • a site value tax to be introduced on "development land"
  • prioritising investment in construction and infrastructure to restore the building sector to its "optimum" worth of €18bn per annum
  • a  "Plan for Ireland" to 2030 based on the principles of "sustainable communities, quality placemaking and environmental responsibility"
  • a review of the National Spatial Strategy, and more integrated national, regional and local planning, along with a review of the planning system
  • provision of public services such as health facilities, schools and transport networks to be based on "evidence based projections" of need rather than "crisis management"
  • Nama lands to be used to create "sustainable urban neighborhoods" and for public infrastructure and services
  • design quality, environmental impact and whole life-cycle cost to be considered ahead of price alone for government tenders
  • a more flexible approach to unemployment benefit so those in the building industry can obtain part-time work and start businesses while still collecting benefit

Many of the manifesto's wishes are quite vague though, such as its call for "improvements to building regulatory procedures", and for unspecified "minimum design standards" for all publicly funded buildings. It also says the "theory and practice of sustainable development" should be at the heart of government policy on the built environment and public procurement.

Still, it's very welcome to see the RIAI offering a list of ideas ahead of the election. You can read a summary and download the document here. When it comes to the built environment, what would you like to see the next government prioritise?



Construct Ireland now on Facebook!

Construct Ireland is now on Facebook — never let it be said we jump on a trend too early. You'll find our page here, so click on the "like" button and we'll keep you up to date with what's going on at the mag.

And of course we're on Twitter too.  

 

GB Shaw's rotating hut — election policies on housing — China plans megacity

inside_shaws_movable_hut.jpg

Inside George Bernard Shaw's rotating writing hut

Linking you up with some green building and energy stories:

What could today's passive house designers learn from George Bernard Shaw's rotating hut? Treehugger

Is sustainable design wearing thin? Guardian

China to create world's largest mega city Infrastructurist

Can straw bales be used to insulate under a concrete slab? Green Building Advisor

Future housing supply in Ireland — for some interesting commentary from the Ireland After Nama blog  about the Construction Industry Federation's call for new house building, see here and here.

As the election approaches, where are the parties' policies on housing and planning? Ireland After Nama

The Canadian ancestry of the passive house Treehugger

Profile of a passive house in Wisconsin Metro Hippie

Modern Rwandan education centre made with local materials Inhabitat

Dwelling airtightness in Ireland: where we are, and where we're going

 airtightness.jpg
A blower door test being conducted at Jer Rynhart's super air-tight Wicklow home — the house has an air changes per hour rate of 0.11

By Gavin O Se, NSAI certified airtightness tester, certified passive house designer and BER assessor with Greenbuild

Recent issues of Construct Ireland have featured houses that have been to the very best international standards of airtightness: eg Jer Rynhart's house in Wicklow and Tim O'Donovan's house in Cork, both of which had just a fraction of an airchange under standardised test conditions.

At the same time as these super-airtight houses are being built, the latest draft Part L of the Building Regulations is proposing to lower the air permeability rate for new dwellings from its present level of 10 m3/(hr.m2) to 7 m3/(hr.m2).

I was quite disappointed ― though unsurprised ― to learn of the new maximum airtightness level. It set in process a train of thoughts, the result of which is this article, in which I will look at:

    •    Where are we in terms of airtightness and airtightness testing?
    •    Where are we going?
    •    Where do we stand internationally?

Ghost estates manual pays lip service to sustainability



By Sadhbh Ní Hógáin

Managing and Resolving Unfinished Housing Estates is a consultation manual published by the Department of Environment late last year. It identifies unfinished housing estates and outlines the health and safety issues surrounding these unfinished developments.

The report says that the over-supply in key metropolitan areas is not extensive and should improve in the short to medium-term. However, part completed or part occupied developments in areas with a weaker housing market may prove problematic.

The main proposals outlined are to complete unfinished housing estates identified by the National Housing Development Survey, ensure compliance with health and safety legislation and identify the roles and responsibilities of key stakeholders.

The report proposes that a team from each local authority maintain an up to date register of housing developments. This is a positive step, but the key responsibilities of the team should be widened to include the environmental assessment of housing developments.

While it is a positive step by the department to ensure the health and safety of unfinished housing developments, it is important to consider the long-term sustainability and environmental impact of finishing these estates. The report’s main aim is the “delivery of sustainable communities...and sustainable development...”, however there is no definition of sustainability. The three pillars of sustainability — the environment, the society and the economy — should be outlined and used as a basis to evaluate unfinished housing estates. The environmental impact of unfinished housing developments should be considered in terms of promoting sustainable living. A review of demand for housing, the existence of adequate local public transport and the availability of jobs and amenities within a locality are key to sustainable living. No alternative solutions are proposed for sites in areas with a weaker housing market.

The site resolution plan for problematic developments in areas with a weaker housing market should be extended to include the wider environmental impact of completing these developments. For problematic sites the focus should be promoting sustainable solutions. Although the environmental cost of demolishing a development may prove high in the short-term, the long-term environmental cost of completing developments in areas with low housing demand, poor local employment and poor public transport outweighs the short-term cost. This analysis should be included in the forward planning section of the report to promote sustainable low energy communities.

The report’s proposals are based on the National Housing Development Survey (2010). This survey was crucial to identifying unfinished housing estates. However, the report should extend this survey to include technical surveys of all unfinished estates. These surveys should include a review of services, access, safety, structural defects and a review of the quality of the housing stock with a focus on energy and carbon. This survey should focus on developments in areas with a weaker housing market to determine the value and viability of completing them.

Based on the extended survey a cost-benefit analysis should be carried out. This analysis should be used to evaluate the cost of completion — including upgrading the dwellings to a low energy standard — versus demolition of these developments. The analysis should include provision of adequate local public transport, the provision of amenities and the existence of a local job industry. Demolition of sites should be carried out where sites do not satisfy this analysis.

The report is a positive step to ensuring the health and safety compliance of occupied and part occupied unfinished housing developments. However, it would be enhanced if it examined the environmental impact of these developments. The report would also benefit from a detailed cost-benefit analysis which should include the economic, social and environmental costs of completing developments with particular focus on areas with weak housing demand.

Sadhbh Ni Hogain is a structural engineer working at EOS Future Design. She recently completed a MSc in advanced environmental and energy studies from the Centre For Alternative Technology, Wales.

 

William McDonough's Chinese eco-city

William McDonough is arguably the world's most famous green architect and is the father of cradle to cradle design. Here he is describing one of his planned eco-cities in China. Keep watching until the end, it gets good. This is taken from McDonough's Ted talk. There's a longer version of it here

 [video:http://www.youtube.com/watch?v=eY4o3WzCfmM&feature=player_embedded 500x400]

Green building trends for 2011 — going off grid — should cold homes be illegal?

Happy new year to all Construct Ireland readers. We're getting right back into the swing of things here with a new issue due out before the end of the month. Here's a few interesting stories you might have missed over the holidays.

Six green building trends to watch for 2011 Jetson Green 

Ten more (slightly US-centric) trends for 2011, also from Jetson Green

A review of green technology in 2010 Guardian

Largest postwar prefab estate set to be demolished Guardian

Following on from Mark Stephens's blog posts for us on going off grid, here's another guide from Green Building Advisor

How one US town is dealing with the problem of vacant houses New York Times

Should dangerously cold houses be illegal? (I'm going with yes on this one) Treehugger

From the Ireland After Nama blog, a post on the "true extent of Dublin's functional urban region", and a series of interesting-sounding papers on the future of Dublin city

China's ghost cities — building on floodplains (again) — Grand Designs passive house

Here's some linkage for y'all.

Think Ireland's ghost estate problem is bad? China may have up to 64 million vacant homes Sustainable Cities Collective 

The UK is backtracking on plans for a green bank Guardian

Clare councillor wants to build on floodplain. Will we ever learn? Ireland After Nama

A striking renovation and extension project in Kentucky gets Leed Platinum status Treehugger

The most popular design and architecture posts of 2010 Treehugger

Crossway, an eco house featured on Channel 4 TV show grand designs, meets the passive house standard Green Building Advisor

A US perspective on using EPS to insulate foundations Green Building Advisor

Interesting analysis of the government's new greenhouse gas emissions targets Irish Economy

Off grid living, part five — effluent disposal

This is the last in a series of blog posts by the architect Mark Stephens on going off grid. The full series can be found here.


A flooded percolation area is a serious health hazard

Welcome to this final blog post on living off gird, which focuses on the safe disposal of any wastewater from a house not connected to a public sewer.

This topic is probably the one that Ireland has the most experience with (both good and bad), due to the lack of sewerage infrastructure once you leave the main towns and cities. There are currently around 500,000 on-site wastewater treatment systems in Ireland, and many are believed to be contributing to groundwater pollution due to poor design, maintenance and lack of regulation over the years. The EU recently ruled against Ireland for this, and the mandatory inspection of such systems is expected to start within the next year. 

This is also the one topic that will cause the most problems if you are looking for planning permission on a new house or more particularly the renovation of a ruin or abandoned house.

So let’s have a little look at the history of effluent disposal in modern times.

Septic tanks

The traditional septic tank would have been a concrete single chamber system — the outlet would have simply been piped out into a ditch that drained into the next field.

One problem arising with these systems is that frequently the farmer working the field would fill in the ditch, causing the effluent to start backing up. Then you could find yourself standing in a field slowly submerging in crap (this has happened to me on numerous occasions). A system like this also provides little treatment of effluent.

An article by Lenny Antonelli
in issue twelve, volume four of Construct Ireland discusses precisely this problem and the bacterial hazards that are created.

The next stage on from a single-chamber septic tank was the dual chamber (again constructed in concrete). This system allows the solids to settle, with the second chamber taking the overflow which then exits the tank in a similar way. The same problem described above will also occur if the overflow effluent isn’t treated correctly. It’s therefore essential that a proper percolation or polishing filter system is designed and constructed within the curtilage of your own site.

Proprietary effluent treatment systems


A proprietary effluent treatment system utilises some form of aeration or mechanical purification/digestion before the wastewater exits the system. If properly designed for your site conditions, these systems can treat the effluent to a high standard, but consideration must still be given to what happens to wastewater when it enters the field. Most of these systems will require an electricity supply, which will add to your energy usage (and some may say goes against the off-grid ethos). One advantage of such systems is that it is possible to test and verify the quality of the effluent as most of the treatment is done in the unit itself, whereas with septic tanks more of the treatment takes places in the soil itself, making testing of final effluent difficult for these systems.

Composting toilets, reed bed systems etc

The principle of the composting toilet is straightforward — the solid waste goes into a separate section to the liquids, and the solids then dry and become first-class manure for the land. To create this compost requires a bit of time away from human contact which thereby breaks the cycle of the pathogens. Another option is rapid hot composting where usually sawdust or straw is added in order to kill all the known pathogens to humans in hours. But it will typically take about six months for compost to be available in dry conditions, longer if it is outdoors in a damp location.

Another popular way of percolating any waste in the ground is via a reed bed system, which is a natural solution that works ideally on a site with a fall where any effluent trickling through the reed bed is cleaned by micro-organisms living on the root system. Micro-organisms here break down the sewage in the presence of oxygen (ie aerobically). Your site will need to be physically suitable for a reed bed, and you may have difficulty convincing the planners that your system will work.

Planning

Any new effluent treatment system, either for a new house or a renovation will require planning permission. It is often thought that because a house was previously on the site (say for example, a wreck with no septic tank) you will have a better chance of obtaining planning permission. But I have seen many a dream quashed when planning is refused because the ground on site wasn’t suitable. The rules may be relaxed a little if the house already has a septic tank - a proposed upgrade may be acceptable if it improves treatment even if it doesn’t exactly meet the Environmental Protection Agency's Code of Practice. But you will find it harder to convince planners about any new system that falls outside the remit of the EPA Code of Practice.

If you're looking to install a new effluent treatment system for your new build or renovation project, start by contacting an experienced engineer or similar professional who can advise on the most appropriate system design for your site.

So that’s it, my take and discussion for living off-grid. With the country currently in economic turmoil, maybe living a simpler life not connected to electricity, water, sewerage etc doesn’t seem too mad cap after all.

Special thanks again to Nick Rosen's book How to Live Off-Grid.

Mark Stephens
ARB RIBA MRIAI is a UK and Ireland registered and chartered architect specialising in sustainable, unique designs.

Cancun climate talks — apartments for 11 grand — "clean construction"

We're getting down to the real work on the January issue of the mag now. Expect to see case study articles on the renovated architectural landmark that is the former Carroll's cigarette factory in Dundalk, and on a couple of excellent passive houses. We'll also have features on the state of the economy, and on whether it makes more sense to use electrical-based heating devices as our power supply is gradually decarbonised. For now, here's some stories that might be of interest.  

Ireland helping to break logjam in climate talks Irish Times

In the Guardian, George Monbiot says the UK is shifting on its commitment to zero carbon homes. Not surprisingly, the Tory housing minister disagrees.

The cost of not going green for architects Architect magazine

Our cities need intelligent transport systems  Sustainable Cities Collective

Anyone want to buy an apartment in Donegal for 11 grand? Ireland After Nama

The Construction Industry Federation doesn't seem to like Nama terribly much Irish Times

New car engine generates electricity from exhaust heat Inhabitat

The solar industry is helping to revive declining industrial cities in the US midwest New York Times

The case for "clean construction" Reuters

Is there too much focus on building regulations and not enough on proper training for builders? Green Building Advisor

Bailout talks: four truths Ireland can't ignore

imf_protester.jpg
Protester outside Dáil Éireann. Photo: William Murphy

By Richard Douthwaite

Ireland's negotiations with the ECB and the IMF are perhaps the most important talks that this country has engaged in since Michael Collins and Arthur Griffith negotiated the Anglo-Irish Treaty with the British Prime Minister, Lloyd George, in late 1921. This time, the Irish team is led by the governor of the Central Bank, Patrick Honohan, the financial regulator, Matthew Elderfield, and the head of the National Treasury Management Agency, John Corrigan. Unless these three men insist that the following four truths are accepted by those on the other side of the table, the country will be presented with an agreement that will blight its future for at least a generation.

Truth 1. If Ireland has to pay interest on the loans being negotiated at a rate which exceeds the rate at which the economy grows over the next few years, it will make the country's situation worse, not better.


Let's look at the figures. The Greek rescue plan involved loans at 5%. If the same rate is offered to Ireland and the Irish economy shrinks by an average of only 2% a year for the next four years as a result of the tax increases and spending cuts to be introduced under the government's deficit-reduction programme, the real interest rate would be 7%. This is simply not affordable. This is not just because of the interest the country will have to pay on the new debt facility but also because it will have to pay the same rate on the €72 bn of foreign debts the state owes already and on the overseas borrowings of the banks which the state has guaranteed. 


The banks' loans are put at €34bn from German banks, €31bn from British banks, €19 bn from US banks, and $16bn from French banks, a total of €100bn. If all the €85bn of additional foreign debt under the ECB/IMF facility is drawn down, the country's overseas debt would be €257bn by the end of the four-year austerity programme. As a result , Ireland's public debt to national income ratio would be over 200%, an entirely unsustainable level for a country without its own currency. The interest burden would be €18bn a year. This amounts to half the total tax revenue that can be expected in 2015 and perhaps the whole of that year's trade surplus. More frighteningly, it would be €10,000 a year for each person in employment. 


It could be claimed that the banks will pay some of this interest themselves but it is far more likely that they will still be making losses because of the bad debts caused by the continuing contraction of the economy. The state may even have to inject more capital into them. If the banks can pay the interest on their borrowings in Ireland they will be doing well. 


Ireland is therefore totally unable to pay any interest on any new loans unless the rate of interest is no greater than its growth rate. If its growth is negative, the interest rate needs to be negative too. What is therefore needed is not a loan but a bailout – either a grant or a loan with an interest rate based on the economy's future economic performance. 


Truth 2. Any grant or loan to Ireland will only buy time for the eurozone to come up with a cure for the whole sick system. Ireland should not be asked to bear more than its proportionate share of the cost of gaining this time which is for the benefit of every euro user. 


Without exception, every eurozone country is running a budget deficit bigger than the Stability and Growth Pact allows and only five small countries have debt-GDP ratios below the 60% ceiling. As a result, all are planning budget cuts which, because they are being implemented simultaneously, could make matters worse by reducing national incomes at a time when national debts are still going up. In other words, the whole eurozone system is sick and Ireland and Greece are just bad cases of a disease which everyone shares. A collective cure needs to be found and it makes no sense for Ireland to make sacrifices unless such a cure is being planned. Part of any agreement between Ireland and the ECB/IMF team should therefore be an assurance that the eurozone is going to be transformed. Preventing governments running large budget deficits should not be part of that transformation since such deficits are a symptom that something is wrong rather than the prime cause. States need to be able to act counter-cyclically to protect their economies and, in any case, Ireland's problems are largely due to its banks. 


The cost Ireland will bear for helping to stabilise the euro until an overall solution can be introduced is not just a matter of money. In fact, money would be the least part of the cost and it can always be repaid later. The greater part would be social — the poverty, the unemployment and the forced emigration — and the lives blighted as a result can never be fully restored. The transition to the new basis for the eurozone should therefore be quick and Ireland and other troubled countries should be supported by their less-sick partners while it is coming about. 


Another element of the cost could be that Ireland will be asked to sell its national investments in companies like the ESB and CIE. This would raise very little money — recent estimates by Siobhan Creaton put their total market value at about €12bn — but would end the possibility of having these companies play a national developmental role. Under private ownership, immediate short-term profits would be the primary goal. The privatisation of Eircom is an awful warning. The company was loaded with debt by a succession of private owners and, as a result, did not have the resources to roll out broadband as quickly as happened in other countries. No-one will ever know how much income the country lost because of this failure. 


Truth 3. The ECB bears a large share of the responsibility for the regulatory failure which led to the property bubble.


Since the eurozone was set up, the Irish Central Bank has been the local office of the ECB. The Central Bank knew the extent to which the commercial banks were going in for excessive property-based lending and gave details each month in its publications. These showed that Irish debts were increasing at an excessive rate in relation to the rate of income growth. For example, over at least three years between 2004 and the end of 2006, private sector debts to Irish banks grew at an average rate of just under 30% a year. This meant that the amount households and firms owed more than doubled in that short period. Tbe Central Bank also knew that most of this excessive lending – over 60% of it in some years - was to do with property. Some loans were for mortgages, others to finance construction companies and developers, and some to people who wished to borrow against their real estate assets. It sent all this information back to head office but it is not clear whether the ECB tried to persuade the Financial Regulator and the government of the dangers the country was running. If it did, it was ineffective. The ECB must pay a share of the cost for this failure. 


Truth 4. There is a Plan B. Ireland doesn't have to take anything that is offered. It can leave the euro quickly and easily. 



If the deal offered by the ECB/IMF negotiators is unsatisfactory, the Irish government can simply announce that, when the banks open the following morning, the accounts in them will be in a new currency – let's call it the harp - and all wages, rents, debts and other payments are to be paid in harp with immediate effect. (Cash payments would have to be made in euro notes and coins until harp ones could be introduced). After the announcement the government would issue itself with the new currency on a debt-free basis so that it no longer needed to borrow to cover its budget deficit. External debts in euros would be negotiated down to an affordable level. The devaluation brought about by the switch would make the country very competitive and any inflation the new money caused would provide the higher incomes needed to pay harp debts and support harp asset values, and thus strengthen the banking system.

The Irish negotiating team must make it very clear to the Commission and the ECB that Ireland would prefer to take this road and undergo an acute but brief crisis rather than accept a deal that entails an indefinite period of national penury with no guarantee that, eventually, its debts can be cleared. It is imperative that the ECB/IMF team understand that unless Ireland is offered a real road out of its present situation within the eurozone, the country will retrieve its national sovereignty and opt out. 


Conclusion

Ireland's bank guarantee was a bluff which the government prayed would never be called because it knew that the country would be unable to honour it if it was. Well, now it has. The day it dreaded has come and the government needs to admit that Ireland cannot honour its guarantees without grants towards their cost from its EU partners. Loans will not suffice. Unless it gets this help, Ireland has no alternative but to renege on the guarantees and to build itself a future within the EU but outside the eurozone. 


Richard Douthwaite is an economist and writer with a special interest in climate and energy issues and local economic development. His new book is Fleeing Vesuvius.

Marketplace + companies featured in this article

Precision Heating

Precision Heating is recognised as a leading supplier of heating and renewable energy products, to both residential and commercial customers throughout the whole of Ireland.